The Changing Global Economy – Study Notes
These notes provide a brief summary of the main ideas about global economic change, based on
classic macroeconomic principles and examples from the 21st century.
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Rule of 70: Divide 70 by the annual growth rate (%) to estimate how many years it takes GNP
to double.
In the early 21st century, developed economies grew at around 2–3% per year, while China
and India grew at around 9% per year.
This means China and India’s GNP could double every decade, while developed economies
take much longer.
The USA remains the world’s largest economy, with a GNP more than twice that of China (at
the time). Japan follows closely behind.
GNP per capita is not always a good indicator of living standards because income distribution
can be unequal.
Countries like the USA, Canada, Germany, France, UK, Japan, South Korea, and Italy rank
high in GNP per capita.
China, despite lower per capita income, has strong economic potential due to:
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Authoritarian but stable government policies.
High-quality, inexpensive labour force.
Attractiveness to foreign investors.
Not being dependent solely on domestic savings.
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Conclusion: The global economy is shifting rapidly, with emerging economies such as China and
India playing an increasingly dominant role. Their sustained growth, combined with structural
advantages, ensures they will remain central to world economic activity.